Retail Franchising: Evolution of the Industry

Retail has been going through one of the most tumultuous time periods the industry has seen maybe since the industrial revolution made horse drawn carriages irrelevant.  E-commerce has created doubt and uncertainty to such an extent in the retail market that many even question the sustainability of such established brands like Walmart.

E-commerce has completely revolutionized the retail market segment and thrown established retailers into a tailspin with brands being overtaken by the “Amazon Phenomenon”.  Everything from toilet paper to coffins are now being purchased online and the traditional retailer is trying to piece it all together.  The retail franchise segment has experienced the same evolution and massive overhaul with the advent of e-commerce buying trends increasing and breakneck speeds.  At the same time, commercial real estate prices in many markets are still high and increasing so one would believe that there is a good portion of retail that is still doing well and actually expanding.

The fun part of the franchise market is that it is an excellent temperature gauge for what market segments are doing well and where the market growth is occurring.  The retail franchise market has had expansion in concepts that are able to create an experience at the unit level and give the buyer a reason to be in the location. Food service and Fitness are the obvious market segments that have benefited from this e-commerce revolution where the consumer still needs to come into the location to purchase the service or product.  For other categories of retail franchising, the ones that will make it moving forward have found ways to still add value to the buying experience at the store level.

For example, BARAMI is a new franchise offering that was put together with a focus on value and customer experience which will allow customers access to high end designer outfits at discount pricing, the clerks have experience and training to help customers put outfits together and provide specific fashion guidance based on the client’s preferences and look.  Klein, Epstein and Parker is another clothing brand that offers custom men’s suits and clothing that is custom fit to the customer and they use a proprietary process to design completely unique looks and fits for suits and other men’s clothing.

The key to both BARAMI and Klein Epstein and Parker are that they drive the customer into the location in order to both provide an experience to the client and sell the optimal product to that person.  Both brands sell clothing, something that e-commerce has taken huge percentages of buyers from other retail businesses, but these concepts offer differentiation and custom experiences which keeps value and purpose at the store level.

The retail franchise market has shrunk overall in the past ten years, but after the initial conversion to e-commerce, the market is seeing a new resurgence and new life for opportunity.  For one, retail has gotten smaller at the store level.  Gone are the days of massive warehouse retail concepts which offer discount pricing and wide selection as their primary value propositions; now is the time for specialization and knowledge-based retail experience.  Customers want experience, consultation and interaction with a staff member who knows enough about the product and service to provide value and guidance to make a better buying decision.

CoffeeIcon is another example of retail which has transitioned into the new world of retail with a smaller retail location that focuses entirely on K-Cup coffee products.  The location is high-end and comfortable, the store clerks are extremely knowledgeable and know enough to really guide the customer through purchasing decisions and make important recommendations.

The retail franchise market has a variety of strong franchise opportunities and potential retail investments; the key when making a buying decision to is understand how the model fits into today’s retail marketplace and whether the model is operating “with the tide” or “against the tide” of what’s happening in the retail franchise market.

Christopher Conner is the President of Franchise Marketing Systems and has spent the last decade in the franchise industry working with several hundred different franchise systems in management, franchise sales and franchise development work. His experience ranges across all fields of franchise expertise with a focus in franchise marketing and franchise sales but includes work in franchise strategic planning, franchise research and franchise operations consulting.  

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